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A rare bullish stock market indicator just flashed, suggesting the S&P 500 rally will continue.
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The Whaley Breadth Thrust Indicator was triggered due to a sharp rise in stock participation.
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The indicator has a 100% success rate one year out, with the S&P 500 delivering an average return of 23%.
A unique bullish signal has emerged in the stock market, indicating that the ongoing S&P 500 rally has the potential to extend further.
The Whaley Breadth Thrust Indicator was recently activated following a significant increase in stock participation within the S&P 500, particularly among non-mega-cap-tech components.
This indicator, which has only appeared 15 times since the inception of the S&P 500 in 1950, is triggered when the number of advancing stocks in the market surpasses declining stocks by a ratio of approximately 3-to-1 over a five-day period.
The recent activation of this bullish indicator signifies a shift from a narrow market rally to a broad-based one, suggesting positive momentum in the stock market.
Factors such as a favorable CPI report for June, potential interest rate cuts from the Federal Reserve, and the possibility of a Donald Trump election victory in November have contributed to the surge in smaller-sized company stocks.
The Whaley Breadth Thrust Indicator has historically predicted positive outcomes for the stock market, boasting a 93% success rate six months post-activation and a 100% success rate one year later.
On average, the S&P 500 has delivered a return of 23% one year after the indicator is triggered, with a six-month gain averaging 17.4%, potentially propelling the index to new heights.
Market experts interpret this signal as a strong indication of upward movement in stock prices, despite its rarity near all-time highs. The recent activation of the Whaley Breadth Thrust follows previous instances in November 2022, June 2020, January 2019, and September 2009.
For more information, you can view the original article on Business Insider